Help need on Schedule K1 - guessing its wrong

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I traded UVXY on 2016. Iam using the TaxAct software.
I have already imported these been reported on 1099B.

1099 B Entry:
Federal - MYNAME- 355 XXXXYYYYY PROSHARES ULTRA VIX S-T FT 2X $59.00




Yesterday I got the schedule K1 in mail .. luckily i havent filed the returns yet.Transactions
Type Broker Code Date Transaction Amount Units
BUY XXX 6/14/2016 5,757 71.00000
SELL XXX 6/14/2016 5,816 71.00000
End of Year Total Units: 0.00000
 

Schedule K1 enteries

A Partnership’s employer identification number   XXXXXXXXXX
B Partnership’s name, address, city, state, and ZIP code   XXXXXXXX
C IRS Center where partnership filed return         Efiled
D Check if this is a publicly traded partnership (PTP) : Checked
Part II Information About the Partner
E Partner’s identifying number          XXXXX
F Partner’s name, address, city, state, and ZIP code XXXXXX
G
    General partner or LLC  member-manager
    Limited partner or other LLC member  Checked

H Domestic partner Foreign partner  : Domestic
I1 What type of entity is this partner?  Individual
I2 If this partner is a retirement plan (IRA/SEP/Keogh/etc.), check here
...................
J Partner’s share of profit, loss, and capital (see instructions):
                  Beginning Ending
Profit % %      0             0
Loss % %       0             0
Capital % %    0             0
K Partner’s share of liabilities at year end:
Nonrecourse . . . . . . $
Qualified nonrecourse financing . $
Recourse . . . . . . . $
L Partner’s capital account analysis:
Beginning capital account . . . $    0
Capital contributed during the year $  5757
Current year increase (decrease) . $  0
Withdrawals & distributions . . $ ( )  5757                (I dont know why my sell amount is not reflected here which is 5816 that includes $59 gain)
Ending capital account . . . . $  0
Tax basis Checked

GAAP Section 704(b) book
Other (explain)
M Did the partner contribute property with a built-in gain or loss?
Yes No
If “Yes,” attach statement (see instructions)
Partner’s Share of Current Year Income,
Deductions, Credits, and Other Items
Part III
1 Ordinary business income (loss)
2 Net rental real estate income (loss)
3 Other net rental income (loss)
4 Guaranteed payments
5 Interest income   0
6a Ordinary dividends
6b Qualified dividends
7 Royalties
8 Net short-term capital gain (loss)  0
9a Net long-term capital gain (loss)
9b Collectibles (28%) gain (loss)
9c Unrecaptured section 1250 gain
10 Net section 1231 gain (loss)  0
11 Other income (loss)   C  0
12 Section 179 deduction
13 Other deductions   K  0
14 Self-employment earnings (loss)
15 Credits
16 Foreign transactions
17 Alternative minimum tax (AMT) items   A   0    
                                                              B   0
18 Tax-exempt income and nondeductible expenses   C  0
19 Distributions   A   0 
20 Other information
V 0
Z 0


After including this Schedule K1 information , my tax returns remains unchanged.
Please let me know if schedule K1 is just FYI to IRS when we informed capital/loss already in 1099B



 

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It looks like you got a "zero K1".  I get a bunch of these.  Basically, if all the numbers in the various Part III entries are blank / zero, you can ignore it (at least if you didn't get a non-zero one from them in year's past).  I think this is because if you own the partnership at certain times, possibly like the end of the year, then for tax purposes they distribute some of the partnership activities to the partners and then those boxes wouldn't all be blank (note they aren't actually distributing anything tangible; this is separate from any dividends / distributions they might have paid during the year).  However, if you owned it for a short period of time, you might have missed getting any of these tax activities distributed to you, and even so, they will send you a K1.

regardless of all that, you still report your buy and sell info on form 8949 / Sch D reflecting the capital gain or loss.  The info for that is on your 1099, but sometimes it might go in part IB instead of part IA of 8949 - just follow the 1099 instructions, but sometimes partnerships trades end up in a slightly different place.  

I dont think it applies to this particular stock, but sometimes you have to be careful to adjust your cost basis if some of the distributions it paid were classified as return of capital.  Hopefully your broker gets this right automatically, but not always.

The reason your distributions line doesn't include the gain is because reducing your capital account below zero can result in a debt to the partnership - which would have bad consequences for a limited partner's capital account to be negative.

In case you were not aware of the classification of this fund, in the future you may want to review the funds to determine how they are structured. Some categories of ETFs are more likely to be classified as partnerships and will issue a K-1. The tax consequences of this can sometimes be significant. In your case it doesn't look like you had any share of income, but it's something to watch for in the future. Also pay close attention to these types of investments in retirement accounts.

marginoferror said:   "...... Also pay close attention to these types of investments in retirement accounts."
 Why?  Is there any filing requirements for these types of investments in an IRA?

xerty said:   It looks like you got a "zero K1".  I get a bunch of these.  Basically, if all the numbers in the various Part III entries are blank / zero, you can ignore it (at least if you didn't get a non-zero one from them in year's past).  I think this is because if you own the partnership at certain times, possibly like the end of the year, then for tax purposes they distribute some of the partnership activities to the partners and then those boxes wouldn't all be blank (note they aren't actually distributing anything tangible; this is separate from any dividends / distributions they might have paid during the year).  However, if you owned it for a short period of time, you might have missed getting any of these tax activities distributed to you, and even so, they will send you a K1.

regardless of all that, you still report your buy and sell info on form 8949 / Sch D reflecting the capital gain or loss.  The info for that is on your 1099, but sometimes it might go in part IB instead of part IA of 8949 - just follow the 1099 instructions, but sometimes partnerships trades end up in a slightly different place.  

I dont think it applies to this particular stock, but sometimes you have to be careful to adjust your cost basis if some of the distributions it paid were classified as return of capital.  Hopefully your broker gets this right automatically, but not always.

 I bought that without analyzing and its a mistake !!!!
  Not going to do the same. Thanks for advise

marginoferror said:   The reason your distributions line doesn't include the gain is because reducing your capital account below zero can result in a debt to the partnership - which would have bad consequences for a limited partner's capital account to be negative.

In case you were not aware of the classification of this fund, in the future you may want to review the funds to determine how they are structured. Some categories of ETFs are more likely to be classified as partnerships and will issue a K-1. The tax consequences of this can sometimes be significant. In your case it doesn't look like you had any share of income, but it's something to watch for in the future. Also pay close attention to these types of investments in retirement accounts.

Thanks for advise. 

momoman said:   
marginoferror said:   "...... Also pay close attention to these types of investments in retirement accounts."
 Why?  Is there any filing requirements for these types of investments in an IRA?

  There are additional issues, generally, that you have to be aware of as xerty pointed out. There could also be state complications.

But specifically in response to your question, investing with tax exempt accounts could result in having to pay unrelated business income tax. Also, one of the major benefits of investing in limited partnerships are the tax benefits. You don't benefit from those tax advantages in retirement accounts (for the most part).

My view is that you should avoid investing in limited partnerships, unless you have a specific reason for doing so. People often do, but if it's just "this stock looks good" you should consider other options. You just need to understand the consequences of investing in those types of entities.

A few years ago I invested in AGQ (3x bull silver ETF) and made a few trades in my IRA.  I think I got a K1 for that but didn't do anything with it since I assumed no taxes were payable.



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